Hard to swallow. Hormel Foods Corp, the company responsible for Spam (cue the Monty Python Spam song), is going all organic. Hormel revealed this morning that it has agreed to buy privately owned Applegate Farms company for US$775 million (around $1 billion). Applegate is a leading brand in the natural and organic prepared foods sector. “A growing number of consumers are choosing natural and organic products. This deal allows us to expand the breadth of our protein offerings to provide consumers more choice,” Hormel Chief Executive Jeffrey M. Ettinger said in a statement. The move is the latest in a growing move away from Spam. Hormel paid more than US$700 million in January 2013 for the Skippy peanut butter business, which is decidedly non-organic. Hormel also owns a range of packaged Mexican foods called Wholly Guacamole. It also owns a range of sports milks and other drinks (Muscle Milk). But according to US analysts, Hormel’s turkey-based food business called Jennie-O (the mind boggles) has been hit by an outbreak of bird flu across the US. Applegate will become part of Hormel’s “refrigerated” foods group, which accounts for around half Hormel’s more than US$10 billion a year in sales and which has been performing poorly as US consumers abandon packaged foods and prepared foods in favour of fresher, lighter products. — Glenn Dyer

Financial truffle hunting. Another new CEO at an ASX200 company, another review of the company in the months after being named in February, and then yesterday the announcement of the discovery of a lazy $1 billion of assets surplus to requirements, a spare $170 million to $200 million in cost cuts, and that’s business. The same board remains in place, supporting the “discovery” of the surplus assets and cost cuts they and the former CEO could find in a month of Sundays. And yet, in the space of nigh on four months, energy giant AGL Energy tells investors and the ASX that’s exactly what new CEO Andy Vesey and his managers, some of whom are new, have managed to do. Sounds like a form of financial truffle hunting — you need the right dog or pig with the right sense of smell and good country to dig out the little nuggets of gold. And by the way, don’t bet on AGL keeping its Gloucester coal-seam gas project in NSW — it has already caused a lot of poor publicity for the company and is now under review as part of the review and locating of the billion or so in unwanted assets. AGL shares hit an eight-year closing high of $16.47. The bottom line is that AGL will quit wind power (its stake in the Macarthur Farm is on the market, the biggest in the country) and move deeper into solar … Kerrching! — Glenn Dyer

Being cheap and nasty no longer flies. More signs that the global airline industry is rolling in cash (no, Qantas, it’s not just the heroic efforts of CEO Alan Joyce). Ryanair, the pioneering low-cost European carrier overnight revealed a surge in earnings for the March financial year, after a major strategy overhaul in 2013-14. In fact, after-tax profit was up 66%, and the airline is expecting another rise in profit in the 2015-16 financial year as more people book to fly the airline, which has been widely despised for its inflexible and arrogant approach to customer satisfaction and concentration on costs. Profit after tax was 867 million euros (around $935 million) and will rise to between 940 million and 970 million this year (over $1.05 billion). Passenger numbers increased 11% to 90 million, compared to the 4% target at the start of the year and a 10% rise is forecast for the current year. Ryanair said lower fuel costs helped, but it played up the  “improved customer service” and a move away from its original strategy of flying to small, low-cost, out-of-the way regional airports (which dumped big transfer costs on passengers). “Flexible ticket”’ (shock horror) for business fliers also helped attract more passengers who want to fly to more established airports. The strategy revamp followed two profit warnings in 2013 as the company struggled with competition, and its bad reputation for dealing poorly with customers. Being nice and treating customers as human beings actually works and is profitable. The new approach was summed up by CEO Michael O’Leary as one that aims to treat passengers as customers rather than enemies and not to “unnecessarily piss people off”. Ryanair turns 30 this year. Middle-aged and nice is better than middle-aged and mean. — Glenn Dyer

Peter Fray

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